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Financial Markets Conduct Act 2013

Dealing in financial products on markets - Insider trading - When prohibition on insider conduct does not apply

248: Exceptions in respect of underwriting agreements

You could also call this:

"When underwriting agreements are involved, there are exceptions to the rules about using inside information to gain an advantage."

Illustration for Financial Markets Conduct Act 2013

If you have inside information about a company, you are not allowed to use it to gain an advantage. However, there are some exceptions to this rule when it comes to underwriting agreements. You can acquire financial products under an underwriting agreement without breaking the rules stated in Section 241.

When negotiating an underwriting agreement, you can share inside information with the person you are negotiating with, as long as you are only sharing it for that purpose. This means Section 242 does not apply in this situation.

You can also give advice or encouragement to someone to enter into an underwriting agreement, without breaking the rules in Section 243, as long as that is the only reason you are giving the advice.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091331.

Topics:
Money and consumer rights > Banking and loansBusiness > Industry rulesBusiness > Fair trading
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247: Exception for disclosure in connection with preparing PDS or limited disclosure document, or

"It's okay to share secret information when making documents to sell financial products"

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249: Exceptions in case of knowledge of person's own intentions or activities, or

"It's okay to trade or advise on financial products if you know your own plans or someone else's plans."

Part 5Dealing in financial products on markets
Insider trading: When prohibition on insider conduct does not apply

248Exceptions in respect of underwriting agreements

  1. Section 241 does not apply to the acquisition of the financial products of a listed issuer under an underwriting or a sub-underwriting agreement.

  2. Section 242 does not apply if the inside information is disclosed to a person for the sole purpose of negotiating an underwriting or a sub-underwriting agreement with that person in respect of the financial products in question.

  3. Section 243 does not apply if the advice or encouragement is given for the sole purpose of persuading the person to whom it is given to enter into an underwriting or a sub-underwriting agreement in respect of the financial products in question.

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